Evansville Courier & Press staff and wire reports
INDIANAPOLIS - House Democrats made a counterproposal Friday to the offer Republicans laid on the table Thursday, upping the ante in the high-stakes game of property tax relief in the Legislature's final days.
Democrats contend their revised version would offer a combined total of $1 billion of property tax relief to homeowners while freezing property taxes for senior citizens.
Republicans found problems with the Democrats' plan and said they wanted to continue negotiating.
Ways and Means Chairman William Crawford unveiled the Democratic plan Friday during a meeting of a House-Senate conference committee hearing House Bill 1001. That's the massive omnibus bill that contains elements of Gov. Mitch Daniels' property tax relief package as well as lawmakers' own ideas.
The Democratic-controlled House and Republican-controlled Senate each have passed their own versions of House Bill 1001, prompting intense negotiations to hammer out a compromise before the Legislature's March 14 adjournment deadline.
The Democrats' counteroffer still would cap property taxes on homesteads at 1 percent of assessed value. But it would not include a 2-percent cap for rental properties or a 3-percent cap on business properties, as the governor and Republican lawmakers want.
The Democrats' plan also does not include shifting entire local levies to the state.
Democrats cited recession concerns. The Daniels administration's Office of Management and Budget released a report Friday showing the state collected $43 million less than expected in February. Since the last revenue forecast in December, the state has collected $85.9 million less than expected.
"We think it's a fair way to go, given the uncertainty of the economy," Crawford, D-Indianapolis, said of the Democratic plan. "We can only do so much."
Under Crawford's proposal, property taxes would be frozen for senior citizen homeowners older than age 65, whose incomes are no more than $35,000 individually or $50,000 jointly, and whose homes are no more than $200,000 in assessed value.
By counting $250 million in homestead credit already pledged, $150 million more on top of that, plus $600 million generated from raising the 6-percent sales tax to 7 percent, House Democrats say they could provide $1 billionin property tax relief.
The Republicans' proposal would have the state take over the costs of several levies, including school operating costs, child welfare, juvenile incarceration and police and fire pensions now covered by local property taxes.
By contrast, the Democratic counteroffer would not have the state taking over those levies, although the state would assume the costs of any growth in four other levies relating to medical assistance for children with special needs or children's psychiatric treatment. School operating costs and existing debt would not count against the 1 percent caps on homeowners' bills, under the Democrats' plan.
Republican Rep. Jeff Espich said those costs could make up 60 percent of a person's property tax bill, so exempting schools and debt would substantially reduce relief for homeowners. The Republican plan instead would allow bills to exceed the caps only if voters approved major local projects in a referendum.
Both plans would raise the sales tax to 7 percent to help pay for relief.
Thursday, Republicans from the House and Senate stood on a Statehouse stairway and offered their proposal to close the deal. Their plan would cap property taxes on all properties, but phase them in over two years. They said it would provide $700 million in immediate relief and remove $1 billion from property tax levies. Gov. Mitch Daniels said Thursday he would sign that version if it passed.
Senate Tax Chairman Luke Kenley, R-Noblesville, said the competing plans offered this week by each party show a willingness to negotiate as the session nears its deadline.
"We're both trying to reach out," Kenley said.
The legislation must past in identical form in both the Senate and House in order to move on to the governor.